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Startup that hopes to help building owners better monetize DER raises 1.5M

Building with rooftop solar, a Distributed Energy Resource (DER).Credit: Image by Solarimo from Pixabay

David Energy, which calls itself a new kind of energy provider, this week announced the close of a $1.5 million Pre-Seed round co-led by Box Group and Greycroft. Great Oaks, Oceans, and a group of strategic angel investors including Zach Weinberg, Nat Turner, and Kiran Bhatraju, also joined the round.

David Energy says it has developed a software platform that utilizes machine-learning to act as the Energy Operating System for buildings. It says its platform was developed to streamline wholesale energy purchasing, report sustainability metrics and optimize Distributed Energy Resources (DER) such as smart thermostats, battery storage, and solar according to a building’s unique needs.

Founders of the new company are entrepreneurs and veteran energy industry experts.

  • James McGinniss, CEO, previously founded and led Texas Guadaloop, a team of over 30 engineers competing in the SpaceX Hyperloop competition, where they received the 2017 Innovation Award.
  • Ahmed Salman, CTO, is an automation industry veteran with 15 years of experience at Siemens and Schneider Electric. Prior to co-founding David Energy, Ahmed developed a proprietary Energy Management Software platform for R3 Energy Management, a local NYC energy consulting firm acquired by David Energy prior to the Pre-Seed fundraise.
  • Brian Maxwell founded and sold two renewable energy companies that developed hundreds of megawatts of utility-scale solar projects globally, prior to David Energy.

“We are at the dawn of a 40-year energy transition away from large, centralized, and analog fossil fuel plants and towards small, distributed, clean and digitally native energy resources that are placed in users’ homes and buildings,” said McGinnis. “This tectonic shift requires an entirely new business model and approach that incumbents are poorly positioned to create.”

Retail Electricity Providers (REPs) are traditional energy companies that predict user demand and purchase energy so that customers aren’t exposed to price fluctuations. The power REPs buy is then shipped on wires owned by the utilities. Distributed Energy Resources (DERs) such as smart thermostats, battery storage, solar power, backup generators, and advanced HVAC controls, which require software to be controlled, are fundamentally changing the electricity grid and shaking up this old-world, analog industry. REPs are having a hard time catering to customers with DERs, who are able to respond dynamically to energy markets and whose resources sometimes allow them to sell power back into the grid.

David Energy’s software platform and approach to energy supply contracts offer customers control and visibility while addressing many of the problems inherent in the shift to distributed and variable sources of electricity, according to the company.

By leveraging building data, demand-side software, and the DERs the building has at its disposal, the company’s Energy Operating System can intelligently buy power and optimize traditional supply contracts while integrating customer resources seamlessly into energy markets. As the world shifts to carbon-free energy and building owners face new regulations like the Climate Mobilization Act in NY, David Energy believes it can help by sourcing cleaner sources of energy and ensuring buildings are consuming energy responsibly.

David Energy says it will take a flat software-as-a-service fee from customers, instead of a large markup on the amount of power procured. This approach, it says, means that the company has true financial incentive alignment with customers to keep them happy, lower their energy bills, provide transparency, and minimize consumption.

“Energy is a trillion-dollar-plus global market that surprisingly has had little software innovation,” said Teddy Citrin, Principal at Greycroft. “David Energy is driving a wedge in the market by enabling cost reductions and superior operations, for some of the most advanced buildings in the world.”

“This is a hard and essential problem to solve: we’re seeing how out of date our energy grid is through stories like the power shut offs in California while at the same time we need a very advanced grid to address climate change, one of the greatest issues of our time,” said Adam Rothenberg, Partner at BoxGroup.

DISTRIBUTECH International and POWERGEN International showcases energy startups each year through Initiate!, the Clarion Energy start-up challenge.